7 things every homebuyer should know
Don't even think about searching for a new house until you know these steps.
This post comes from Maryalene LaPonsie at partner site Money Talks News.
Real estate site Trulia says house searches cool off in the fall and slow to a crawl in December. What does that mean for you? Less competition and more opportunities to score a deal on the house of your dreams.
But before you jump head first into a house search, here are some things you need to know.
Know what you need vs. what you want
Before you even think about hitting an open house, you need to know what you are looking for. Otherwise, you may find yourself falling in love with something impractical or, worse, sweet-talked by an agent into placing an offer on a home that doesn't fit your needs.
Start by sitting down with a pen and paper -- and your honey if you will be buying a house with one -- and write down two columns: "needs" and "wants."
Under needs, list your non-negotiables. For example, if you have a growing family, you may need three bedrooms, two baths and a fenced-in yard for the dog. Under wants, put your wish list. Maybe you crave a gourmet kitchen or a large master suite. These are things you can live without, but life would be nicer if you had them.
Armed with this information, you can quickly weed out the homes that don't meet your needs. Then you can focus on whittling down your short list to the ones with features on your wish list.
However, it goes without saying there is no perfect house and, especially if you don't have a lot of money to play with, you should be prepared to sacrifice some items on your want list in exchange for an otherwise serviceable house in your price range.
Know the right process for buying a home
Now we get to the nitty-gritty. You need to follow certain steps if you want your home search and purchase to go smoothly.
Financing first. Your first stop should always be the bank. There are three reasons to get a loan preapproval, if you can.
- You know what price range you can afford.
- It can give you an edge in the event there is a competing offer on a house.
- It can speed up the underwriting process once you have a purchase agreement.
Unfortunately, many banks no longer issue preapprovals and only offer to pre-qualify a potential buyer. It's not as helpful as a preapproval but it may be the best you can do.
Agent second. Once you know how much you can afford, it is time to find your agent. It may be tempting to go it alone until you find a promising house, but a buying agent can provide an inside track on hot listings or steer you toward perfect properties not on your radar screen.
You want someone who is going to negotiate a great deal, so now is not the time to sign on with your cousin simply because she's family. Find the right agent by asking the following:
- How long have you been licensed?
- Do you work part time or full time?
- What percentage of your clients are buyers?
- How well do you know the area?
- How often will you provide me with new listings?
- Do you specialize in a certain type of property?
Then make a fair offer. OK, you've found the perfect house and are ready to make an offer. Remember that buying agent you found? This is where she earns her keep by helping you settle on an offer that isn't insulting to the seller but is still a deal for you.
Confirm with an inspection. Finally, shell out the couple hundred dollars it costs to have the house inspected by a professional. Walk through the house with the inspector if at all possible. Sure, you'll get a written report, but it is so much better to be able to ask questions and have potential problems pointed out to you in person.
Have a Plan B. And if the inspection turns up a major problem, you need to have a Plan B in mind. Your most excellent buyer agent has, of course, included a provision in the purchase agreement stating the sale is contingent on a good inspection. When an inspection finds trouble, you need to implement your second option, whether that is to back out of the agreement and retrieve your deposit or renegotiate the price with the seller.
Let's say you sit down with the loan application officer and learn your monthly payment will be only $750. Yes! That’s cheaper than renting.
Or is it?
Having your own property is great, but homebuyers need to walk into ownership with eyes wide open. That means factoring in all the costs associated with having a place of your own. When calculating the affordability of a property, ask for estimates on the following costs:
- Lawn maintenance and/or winter snow plowing.
- Homeowners association fees.
In addition, remember that when the roof springs a leak, there is no landlord to call for a fix. Don't buy a home if you don’t have an emergency fund or if you aren’t able to put money aside each month in a repair and maintenance fund.
The winter months mean home sales tend to go cold, but they can be a hot time to get a low price on the house you want.
More on Money Talks News:
This report is just a few suggestions not a real home buying guide. I think the best guide is the following: (1) Realistically determine how much you can afford for a house note. If you are currently paying rent that is a good starting place. If you have storage fees or other outside costs associated with you home add those in and this is the best place to start. (2) Working back from that number use a calculator and determine how much house you can afford. If that amount gets you a $90K house then set your budget at an $80K home because you will have costs for insurance, taxes and PMI fees if you don't have a 20% down payment. (20% down payment is NOT always necessary)
(3) Identify where your down payment will come from and where you will get your closing costs from. Once that has been done contact either a mortgage company, your credit union or a bank with whom you have a relationship (accounts) so they have an interest in keeping you as a client. Find out if your credit will allow you to prequalify for a mortgage and if so how much. (4) If the amount you qualify for is greater than the amount you feel you can pay, use the lower amount. Now determine which area of the city you want to live in and then find an agent to help you locate houses within your payment range.
Now this is a guide to buying a house you can afford.
Reality: (mortgage payment) + (mortgage payment x 65%) = ACTUAL monthly payment
This report is misleading, it has no usable info on what to look for in a new house rather it's filled with info on how to buy a house and put your trust in somebody else's opinion of a house.
Home ownership is a wonderful form of slavery: you work, work, work, and pay, pay, pay. The banks first, all the other expenses and upkeep, and of course the property taxes which you little to no control over.
But it could be worse. You could live in a rental, and pay all that stuff on somebody else's behalf, plus a little profit.
Sorry, Shil- gotta disagree with you regarding (at least some) homeowners associations. You gotta do your own list of pluses vs minuses, just like the wants vs needs above. I'm lucky - the pluses from my Association far, far outweigh the minuses.
First you must keep in mind YOU NO LONGER Need worthless real estate agent.
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